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Equilibrium Dynamics in the Neoclassical Growth Model with Habit Formation and Elastic Labor Supply
Department of Applied Economics II, University of A Coru?a
- 1 Department of Applied Economics II, University of A Coru?a
Theoretical Economics Letters·Volume 02 (2012)·Pages 465–469·Published 19 December 2012·DOI10.4236/tel.2012.25087
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Abstract
This note analyzes the equilibrium dynamics in the neoclassical growth model with habit-forming preferences and elastic labor supply. Habits enter into utility in a multiplicative way. The specification of the habit formation process comprises the particular cases of internal and external habits. Existence, uniqueness and saddle-path stability of the steady state are proved analytically.
KeywordsEconomic GrowthHabit FormationEquilibrium Dynamics
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